Strategic Plans and SWOT Analysis of Tesla Motors

Strategic Management: Tesla Case Study
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Strategic Management: Tesla Case Study
The founders of Tesla Motors formed the company in efforts to build the world’s best electric car. The idea got support from many individuals, including the government who saw it as one of the best alternatives and a means of combatting the changing climate brought about by pollution from the greenhouse gases. Since its inception in 2003, the company has gained serious traction in 2012 when it began shipping its fully electric car in Model S. Arthur describes the model as “fully electric, four door, five-passenger luxury sedan with an all-glass panoramic roof, high definition backup camera, a 17-inch touch screen that controlled most of the car’s functions, keyless entry, xenon headlights, dual USB ports, tire pressure monitoring, and numerous other features that were standard in most luxury vehicles”(Thompson, 2016). The model introduced the company into the European and Asian markets with China coming out as the chief importer. Purchases of the Model S went on in the next two years to surpass those of other luxury cars such as the Mercedes Benz S Class, BMW’s 700 series, Porsche’s Panamera sedan and the Jaguar XJ. Most of the individuals who purchased the Tesla Model S advocated for a better environment that was being fostered by the movement from gasoline powered vehicles. Basing on the success of the Model S, the company heightened its innovations and developed further models in Model X and Model 3 with the former being an upgrade of the Model S hence more expensive.
The company’s ambitions were being spearheaded by Elon Musk who laid out a three element strategic plan:
* Accelerate the transition to zero polluting electric cars.
* Build a variety of affordable electric powered vehicles.
* Convince the general public of the climatic and appealing value of electric cars.
However, the ambitious plans hit a serious snag in 2016, after the fall of the world’s gasoline prices that made it illogical to purchase the electric cars. Also, the other motor vehicle companies had made substantial improvements to their models and had managed to encroach into Tesla’s market share. The challenge now is to examine whether Tesla’s strategies will be challenged by lower gasoline prices and mounting competition.
QUESTION 1
Strength
* Strong global brand reputation and recognition.
* Largest electric car manufacturer in the world.
* Products of high quality.
* Excellent employee management.
* Steady growth in company value.
* A strong, ambitious CEO and overall top management.
* Environmentally friendly cars that support the fight against climate change.

Weakness
* Most of its models are high end models, hence mostly expensive.
* People think that Tesla mostly cares about making profits and building more luxury cars. (Negative public image).
* Few charge points for its electric cars.
* Mileage limitation.

Opportunity
* Expansion in global market and explore in countries with great market potential.
* Expanding product variety.
* Discovering new distribution channel.
* Advancement in technology that help with service efficiency.

Threats
* Failure to meet the customers' satisfactions leads to customer loss.
* Intense competition in the motor vehicle market.
* Saturated markets under the current economic situation.
* Low gasoline prices.
* Gasoline glut.
* Drought weather that increases the costs of electricity production.

The above exhibit highlights Tesla Motors environmental incentive that has made many people interested in what they are producing. Its efforts to reduce the pollution levels in the world through the non-emitting vehicles have been embraced by governments and scientists worldwide and which has in turn contributed to the rise in its market base from the US to the other continents. Tesla Motors is the renowned for its high quality products, making it the largest electric car manufacturer in the world. Elon Musk, the CEO and board chair has a strong leadership background, having managed and grown other established companies such as PayPal, SpaceX and SolarCity Inc. However, the company has been focusing on developing luxury cars that are very expensive and mostly unaffordable by the greater population and in which has branded the company as “profit-centered”. Also, unlike the gasoline powered vehicles the Tesla electric cars are unable to surpass 300 mileages on a single battery hence limiting the individuals travelling over long distances. There are also very few charge points in comparison to gas stations.
Nonetheless, the company has limitless opportunities to expand and explore more global markets that are still untapped. They have barely scratched the areas they are currently focusing and with further developments and a greater product variety the company is sure to attract more customers. The reducing gasoline prices however are proving to be a major predicament in its expansion plans because it makes the electric cars way too expensive than the gasoline powered vehicles. Other players in the motor vehicle industry have also improved their models to better Tesla’s electric models even if just in design. Arthur notes in the article “Other auto manufacturers (Ford, Chevrolet, Toyota, and BMW) had already introduced a low-end twin engine (one battery-powered, the other gasoline-powered) that would compete against the Model 3, and they were working to improve these models substantially to make them even more attractive to buyers than the Model 3” (Thompson, 2016). The deteriorating weather conditions, including the unforeseen drought patterns have led to rising costs in electricity production, making the use of electric cars not feasible in the already saturated economy.
Recommendations
Tesla Motors has made significant losses in light of the reduced gas prices and rising competition. Hence, in efforts to challenge the aforementioned, Tesla Motors should:
* Focus on building low priced electric cars that would be affordable by the greater middle and low income earners.
* Identify alternative sources of electricity production.
* Expand into the untapped markets.
* Provide superior service to its customers and ensure it doesn’t compromise on the quality of its products.
Basis for Recommendations
* The company and most of the competitors involved in the manufacture of electric cars target the wealthy individuals who are few. By building low priced electric cars that are not flashy but convenient and comfortable Tesla Motors would not only grow its market base but also improve on its revenue and overall profitability.
* The devastating climatic conditions characterized by reducing water points that are the chief electricity producers, the company should work on identifying alternative sources for electricity production. The option will reduce the production and management costs of the electric cars and in addition provide alternative sources for the future.
* The electric cars have not been fully embraced in the US, Europe and the Asian Markets. With improved and convenient developments, Tesla motors should be in a position to tap into those areas that others have not ventured.
* Considering most of the competitors have also begun making electric cars with some producing improved models the only way for Tesla to differentiate itself from the rest is through the provision of incomparable service to its clients. That would involve going the extra and providing extra sales services free of any charge. For instance, the company could offer free monthly services to all its electric cars.
QUESTION 2
In light of the saturated economy, most companies are faced with a cash crunch and resorting in measures such as mergers and ...